TO IDENTIFY THE EMERGING CHALLENGES RELATED TO IMPORTS : A CASE OF THE INDIAN PULSES INDUSTRY

Abstract

Pulses or dals contain rich and cheap sources of protein for human consumption and their production and consumption are important in maintaining food security. Cultivation of pulses also helps to maintain soil fertility through the nitrogen fixation. In India, a large proportion of the Indian population is vegetarian and pulses form the main source of vegetable protein. However, the per capita consumption of pluses has declined from 69 grams/day in 1960-61 to 36 grams/day in 2007-08. For India, the World Health Organization recommends a minimum consumption of 80 grams of pulses / capita /day. The size of Pulses economy of the world is 61.3 million MT. India is the largest producing country with 22 % (13.50 million MT) of the world production concentrated in India, 30 per cent of total consumption and 33 per cent of global acreage under pulses. Productivity of pulses in India has been very low at 622 kg/ ha, when compared to 1908 kg/ha in Canada / USA.

Even though India is the largest pulses producer of the world, it imports large amount of pulses from rest of the world. India also used to be an exporter of pulses but in June 2006 government banned the export of pulses to meet the growing domestic demand. So, it is important to analyze, how the inflow and outflow of pulses from India has changed over period of the time; why India is importing a considerable amount of pulses; examine the impact of inflow of pulses in terms of area under cultivation, quantum of production, prices and net food grains availability for the consumers. But, as India has a large vegetarian population, which is largely dependent upon pulses, wheat and milk as its major source of protein, the size of consumption of pulses in India is around 16 million MT. In order to meet such demand, India is dependent upon import of pulses to the extent of 23 million MT. India imports its requirements from various countries, such as Myanmar (Urad & Tur), Canada, Australia and various other countries.

The research project tries to review the current import policy, the tendering mechanism presently employed by the Indian government & suggests some direction for policies to government of India in import of pulses, which will definitely help to frame out a long term strategy in import of pulses & also assure to meet pulses demand of the country with stabilizing the rising prices of pulses in Indian market giving relief to the Indian consumer.

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Pulse importers face a number of risks that threaten the profitability of their transactions. Many importers forward sell their products before taking physical possession of them. Falling domestic prices prior to delivery provide incentive for buyers to renege on contracts. Domestic market conditions, particularly variability in domestic production and import activities, also affect pulse prices. The volume of business and the prices contracted by other importers serving the same market are key factors affecting an importer's profitability. Multiple impending shipments can flood the market and lead to lower prices, increasing the probability of default by domestic clients. Thus, traders closely monitor competitors' transactions but appear to operate independently, with not much communication between them except through their brokers. Indian importers also face foreign exchange risk because transactions with every country are conducted in U.S. dollar.